- XLM has lost 11.1% of its value over the last 7 days
- Analyst believes a drop to $0.23 may be next if Stellar fails to hold $0.27 as support
Since hitting a local high of $0.3344 a week ago, Stellar [XLM] has traded within a descending channel. Over the past week, XLM has declined to hit a local high of $0.276. In fact, at the time of writing, XLM was trading at $0.2799.
This marked a 4.26% decline in 24 hours. On the weekly charts, the altcoin was down by 11.1%.
This strong decline over the past week has left crypto analysts talking over the altcoin’s trajectory. One of them is Ali Martinez, with the analyst hinting at a prospective decline to $0.23.
Source: X
In his analysis, Martinez noted that Stellar could face a strong price correction as bearish momentum builds. According to him, XLM must hold the $0.27-level to avoid further losses. A breach below this level will see the altcoin find the next support around $0.23.
In light of this worrying trend, it’s important to assess and determine what XLM’s charts seemed to suggest.
Is the altcoin set for further losses?
According to AMBCrypto’s analysis, Stellar has been seeing strong downward pressure as bears take hold of the market.
Source: Santiment
We can see this bearishness as investors take a step back in the market.
Consider this – Stellar’s Open Interest aggregated by exchanges has declined for 6 consecutive days. At press time, the altcoin’s Open Interest sat at $38 million – A decline from $49 million. When Open Interest falls, it means that new investors are not opening new positions while existing ones are exiting the market.
Source: Santiment
Additionally, looking at the altcoin’s funding rate aggregated revealed that it declined into negative territory again. A slip into this zone means that even those opening positions as Open Interest declines have been mostly going short. Thus, a majority of market participants are betting on the price to fall – A sign of strong bearish sentiments.
We can see this bearishness taking hold of the market as Staller’s RSI has continued to decline on the charts. Since making a bearish crossover 5 days ago, the RSI has dropped to 48, with its MA rising to 58. This could allude to a bearish bias, with sellers having strong control of the market.
Source: Tradingview
These sellers have offloaded 82.62 million XLM tokens over the past 24 hours, as per Coinalyze data. A negative delta of -15.6 million XLM meant that bears are in control of the market now.
Simply put, Stellar is seeing strong downward pressure with bears dominating the market. A continuation of the prevailing trend will position XLM to register more losses. Therefore, if the bears continue to dominate the market, the selling pressure will push the price further down.
A drop on the altcoin’s price charts from its press time rates will see XLM find support around $0.263. If this fails to hold, further decline will send XLM to $0.252. In the short term, a drop to $0.23 projected by Martinez may be unlikely unless its’s a sustained decline.
For a trend reversal though, XLM must hold above $0.27.
